Once Destined for Bankruptcy, Adventrx Pharmaceuticals Sets New Course With Reformulated Drugs

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Like something out of an old Clint Eastwood movie (where the cowboy left for dead is somehow resurrected), San Diego’s Adventrx Pharmaceuticals (AMEX: ANX) announced last week that it raised $19 million and filed a new drug application.

Shares of the biotech, which had no pulse a year ago, sprang to life. Adventrx stock that had been trading around 26 cents a share zoomed to 39 cents on the news, before falling back to 28 cents in extraordinarily heavy trading of nearly 85 million shares. Trading in Adventrx continues to be heavy, and I’ve been contacted by several shareholders who want more details about Adventrx, or who are urging me to write more. Yesterday, Adventrx closed at 47 cents a share, yet one recent e-mail enthusiastically predicts, “This one goes to $2.” A gamblers’ mentality surrounds Adventrx these days, and should serve as a warning to investors.

Nevertheless, the comeback at Adventrx has been remarkable. Brian Culley, who describes himself as the biotech’s “principal executive officer,” recounted the story for me recently, saying that a year ago Adventrx was destined for bankruptcy. He’ll no doubt revisit the story again in a presentation he’s set to give this afternoon at the OneMedForum Finance Conference in San Francisco.

Adventrx specializes in developing improved formulations of existing cancer treatments that address side-effects and other limitations associated with their safety and use. But Culley told me during a telephone interview, “The company ran into two pretty troubling matters.” One stemmed from a decision in mid-2008 to discontinue the late-stage clinical trial of a “co-factor” drug that was intended to enhance the activity and reduce the toxicity of a widely used chemotherapy for metastatic colorectal cancer. “They got equivocal data, and it basically failed,” Culley says. “That set the company on a pretty poor trajectory.” The other matter, Culley says, was that Adventrx was “hemorrhaging cash while running headlong into pretty hard economic times.”

By last March, Adventrx had laid off all but a handful of employees and announced plans to “substantially end” its drug development and business operations. A few weeks later, the company was down to just two employees—Culley, a vice president who had previously headed business development, and lawyer Patrick Kernan, who assumed the duties of chief financial officer as well as Adventrx general counsel.